Workbook Regulatory Environment, Law & Compliance CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 1
CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 2
Regulatory Environment, Law & Compliance 1. When was Reserve Bank of India established? a) 1920 b) 1925 c) 1935 d) 1940 2. Which of the following is true about the functions performed by RBI - (i) It is the Bank of Issue (ii) It acts as banker to the Government (iii) It is the banker of other banks (iv) It regulates the flow of credit (a) Both (i) and (ii) (b) Both (iii) and (iv) (c) All the Above (d) None of the above 3. Which among the following is incorrect? (a) RBI is the Bank of Issue (b) RBI acts as Banker to the Government (c) RBI is Banker's Bank (d) RBI does not regulate the flow of credit 4. Which of the following is true about the restrictions on RBI? (i) It is not to compete with the commercial banks. (ii) It is not allowed to pay interest on its deposits. (iii) It cannot engage directly or indirectly in trade. (iv) It cannot acquire or advice loans against immovable property. (v) It is prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security. CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 3
(a) only (i),(ii),(iii), and (iv) (b) only (v) (c) all the above (d) none of the above 5. Which among the following is called the rate of interest charged by RBI for lending money to various commercial banks by rediscounting of the bills in India? (a) Bank Rate (b) Discount Window (c) Monetary Policy (d) Overnight Rate 6. Which one of the following is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds? (a) Benchmark Prime Lending Rate (b) Annual Percentage Rate (c) Bank Rate (d) Repo Rate 7. Which of the following are quantitative control methods? (a) Bank rate & CRR (b) Statutory Liquidity ratio (c) Open market operations (d) All of the above 8. Objective of monetary policy is to: (a) Control inflation (b) Discourage hoarding of commodities (c) Encourage flow of credit into neglected sector (d) All of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 4
9. __________ policy refers to policy measure taken by RBI to control & regulate money supply (a) Credit (b) Monetary (c) Fiscal (d) Financial 10. When RBI is the lender of last resort, what does it mean? (a) RBI advances necessary credit against eligible securities (b) Commercial banks give funds to RBI (c) RBI advances money to public whenever there is an emergency (d) All of the above 11. Fiscal policy refers to (a) Sale and purchase of securities by RBI (b) Government taxes, expenditure and borrowings (c) Government borrowings from abroad (d) Sharing of its revenue by Central Government with States 12. Open market operations, one of the measures taken by RBI in order to control credit expansion in the economy, means (a) Sale or purchase of Government securities (b) Issuance of different types of bonds (c) Auction of gold (d) To make available direct finance to borrowers 13. Which one among the following formulates the fiscal policy in India? (a) Planning Commission (b) Finance Commission (c) The Reserve Bank of India (d) Ministry of Finance CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 5
14. When was Reserve Bank of India established? (a) 1920 (b) 1925 (c) 1935 (d) 1940 15. When was SEBI constituted? (a) April, 1988 (b) March, 1982 (c) July, 1992 (d) December, 1974 16. Which authority was set up with the primary responsibility of promoting old age income security by establishing, developing and regulating pension funds? (a) Association of Mutual Funds in India (b) Insurance and Regulatory Development Authority (c) Pension Fund Regulatory Development Authority (d) Securities Exchange Board of India 17. All of the following are the functions of SEBI under SEBI Act of 1992, EXCEPT: (a) Regulating the business in other securities markets but not in stock exchanges (b) Promoting and regulating self-regulatory organizations (c) Regulating substantial acquisition of shares and take-over of companies (d) Prohibiting insider trading in securities 18. Members of the stock exchanges are required to preserve which of the following documents as per the SCRA. (a) Networth certificate (b) Books and accounts and other documents for specific period of time (c) Registration certificate (d) All of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 6
19. The SEBI (Intermediaries) Regulations, 2008, mandates the appointment of Compliance officer. State True or False? (a) True (b) False 20. As per Securities Contract Regulation Act (SCRA), the term 'Security' excludes which of the following? (a) Shares (b) Bonds (c) Derivatives (d) Bullion 21. The Three Stages of Money Laundering are: (a) Layering, Placement, Refining (b) Placement, Refining, Integration (c) Layering, Placement, Integration (d) Layering, Refining, Integration 22. The Forward Markets Commission is financial regulator of: (a) Commodity Future Markets (b) Mutual Fund (c) Insurance (d) Micro-finance 23. Consider the following statements: 1. Forward Markets Commission of India was earlier overseen by the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution 2. At present, Forward Markets Commission is overseen by the Department of Company Affairs, Ministry of Finance, Government of India 3. Forward Markets Commission regulates the Commodity Futures and Financial Futures training in the country. CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 7
Which of the above statement is / are true? (a) Only 1 (b) Only 2 (c) Only 1 and 2 (d) Only 2 & 3 24. Write the full form of the following: NSDL : _____________________________________________________________________ NCDEX : ______________________________________________________________________ MCX : _______________________________________________________________________ ICEX : _______________________________________________________________________ ACE : _______________________________________________________________________ 25. Currently, the highest traded commodity is: (a) Crude Oil (b) Gold (c) Metals (d) Silver 26. SCORES stands for: (a) SEBI Complaints Redress System (b) Special Complaints Redress System (c) Sources for Complaints Redress System (d) None of These 27. SEBI conducts ______ and _______action in its executive function and it passes ruling and orders in its judicial capacity: (a) Efficient and Effective (b) Investigation and Enforcement (c) Regulation and Leadership (d) None of These CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 8
28. For the discharge of its functions efficiently, SEBI has been vested with which of the following powers: (a) Inspect the books of accounts and call for periodical returns from recognized stock exchanges (b) Inspect the book of accounts of a financial intermediaries (c) Compel certain companies to list their shares in one or more stock exchanges. (d) All of the Above (e) None of These 29. The rolling cycle of T + 2 means, Settlement is done in ______ after trade date: (a) 2 Days (b) 2 Months (c) 2 Weeks (d) None of These 30. The actual functioning of the regulator lies in which area (s): (a) regulation-making (b) executive functions (c) administrative law functions (d) All of the above 31. Regulators can pursue micro-prudential goal through which of the following powers: (a) regulation of entry (b) regulation of risk-taking (c) regulation of loss absorption (d) regulation of governance and management (e) All of the above 32. In terms of creation of rules, it is envisaged that the Ministry of Finance would make ‘rules’ that control inbound capital flows (and their repatriation) and that RBI would make ‘regulations’ about outbound capital flows(and their repatriation). Is the statement? (a) Correct Page 9 (b) Incorrect (c) Can’t say CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook
33. The implementation of all capital controls would vest with: (a) SEBI (b) RBI (c) Ministry of Finance (d) Stock Exchanges 34. The statement, “Systemic risk in India will go down if institutional capacity is built for the problems of consumer protection, micro-prudential regulation and resolution” is: (a) Correct (b) Incorrect (c) Can’t say 35. The development agenda in Indian financial economic policy comprises of: (a) Development of market infrastructure and processes (b) Redistribution and financial inclusion initiatives (c) Only (a) (d) Both (a) and (b) 36. The Deposit Insurance and Credit Guarantee Corporation (DICGC) deals only with banks and insure amount up to Rs.__________ in respect of savings, fixed, current, recurring etc. per customer ownership across all accounts across all branches of a failed banking entity. (a) Rs.100000 (b) Rs.200000 (c) Rs.500000 (d) Rs.1000000 37. Of all the given statements in favour of having the supervision and regulation of the financial sector done by regulatory agencies that are independent of the Government, which one is correct? I. The regulator is able to setup a specialised workforce that has superior technical knowledge; II. This is assisted by modified human resource and other processes, when compared with the functioning of mainstream Government departments; CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 10
III. With such knowledge, and close observation of the industry, an independent regulator is able to move rapidly in modifying regulations, thus giving malleability to laws; and IV. The presence of independent regulators improves legal certainty by ensuring that the regulatory approach does not fluctuate with political changes. (a) Only (i) and (ii) (b) Only (i) and (iii) (c) Only (i), (ii) and (III) (d) (i), (II), (iii) and (iv) 38. The Commission recommends that the regulator should be empowered to issue only two types of instruments: (a) regulations and guidelines (b) regulations, guidelines and press notes (c) regulations, guidelines and master circulars (d) guidelines, master circulars and press notes 39. Is the statement “Micro-prudential regulation refers to the regulation that governs safety and soundness of certain financial service providers” is: (a) Correct (b) Incorrect (c) Can’t say 40. The objectives of micro-prudential regulation are: (i) To promote the safety and soundness of regulated persons (ii) To thereby contribute to the stability and resilience of the Indian financial system (a) Only (i) (b) Only (ii) (c) Only (i) and (ii) (d) None of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 11
41. The pillars of the work of the Financial Sector Legislative Reforms Commission (FSLRC) are: (a) consumer protection (b) micro-prudential regulation (c) resolution (d) All of the above 42. Who hosts the Foreign Investment Promotion Board (FIPB) to approve Foreign Direct Investment into the country? (a) Department of Financial Services (b) Department of Revenue (c) Department of Economic Affairs (d) Department of Industrial Policy and Promotion 43. _______________ represents any measure taken by a government, central bank, or other regulatory body to limit the flow of foreign capital in and out of the domestic economy. (a) Capital Controls (b) Resolution (c) Micro-prudential regulation (d) Public Debt Management 44. The statutory basis for administration of foreign exchange in India is: (a) Foreign Exchange Regulation Act, 1973 (b) Foreign Exchange Management Act, 1999 (c) Exchange Control Manual (d) Conservation of Foreign Exchange and Prevention of Smuggling Act 45. Systemic risk is the risk due to (a) Failure of a bank, which is not adhering to regulations (b) Failure of two banks simultaneously due to bankruptcy of one bank (c) Where a group of banks fail due to contagion effect (d) Failure of entire financial system CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 12
46. Which of the following statements is/are correct about Monetary Policy Committee? (i) There are six members in the committee (ii) Three Members are from the RBI (iii) Other three Members of MPC are appointed by the Central Government (iv) The MPC will be chaired by the Chairperson of the central bank. Select the correct answer from following options: (a) Only b and c (b) Only a, c and d (c) Only a, b and d (d) All are correct 47. What is the most widely used tool of monetary policy? (a) Issuing of notes (b) Open market operations (c) Discount rate (d) None of these 48. What is the mean of Repo Rate? (a) When a bank is in need of cash it can it can discount bills of exchange and avail loan facilities from Reserve Bank of India. (b) When a bank has excess cash, they buy securities from RBI against cash on the condition that they resell the securities to RBI on a pre-fixed day and price (c) It is rate at which RBI allows temporary loan facilities to commercial banks against government securities on the condition that the bank will repurchase the securities within a short period. (d) It is a rate which is offered by banks to their most valued customers or prime customers. 49. When the cash reserve ratio (CRR) is increased by the RBI, it will: (a) Increase the supply of money in the economy (b) Decrease the supply of money in the economy (c) No impact on the supply of money in the economy (d) Initially increase the supply but later on decrease automatically. CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 13
50. Open Market Operations means: (a) Sale of agricultural products in the government regulated Mandis (b) Sale and purchase of bonds and securities to the commercial banks by the RBI (c) Sale and purchase of bonds and securities by the RBI to the government (d) Sale and purchase of bonds and securities by the commercial banks to the customers 51. How many members are there is the Monetary Policy Committee (MPC)? (a) 4 (b) 5 (c) 6 (d) 7 52. Current Repo Rate is: (a) 3% (b) 3.5% (c) 4% (d) 4.5% 53. Public Debt Management refers to: (a) Terms of new bonds (b) Proportion of different components of public debt (c) Pattern of maturity (d) All of the above 54. Who conducts public debt operations of the government of India? (a) The Controller of Capital Issues (b) The Union Ministry of Finance (c) The State Bank of India (d) The Reserve Bank of India CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 14
55. A country is said to be in a debt trap if? (a) It has to abide by the conditionality’s imposed by International Monetary Fund (b) It has to borrow to make interest payments on outstanding loans (c) It has been refused loans or aids by creditors abroad (d) World Bank charges a very high interest rate on outstanding as well as new loans 56. Redemption of Public Debt means? (a) Repayment of public debt (b) Refusal to pay public debt (c) Redefining public debt in terms of foreign currency (d) Linking public debt with inflation 57. External Borrowing of the government of India include borrowing from? (a) Foreign governments (b) International organizations like IMR and World Bank (c) Market Borrowings (d) All of the above 58. The best way for the redemption of public debt is? (a) Refunding (b) Repudiation (c) Conversion (d) Actual repayment by means of creating special funds or through capital levy 59. If external debt of a country raises faster than its interest obligations, the country is in the grip of? (a) Liquidity trap (b) Debt trap (c) Liquidity spectrum (d) External crisis CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 15
60. Methods of repayment of public debt is? (a) Conversion (b) Sinking Fund (c) Funded Debt (d) All of the above 61. Public Debt produces? (a) Contractionary effect on the economy (b) Expansionary effect on the economy (c) Both (a) and (b) (d) None of the above 62. The full form of FRBM Act 2003 is (a) Fiscal Regulation and Budget Management Act, 2003 (b) Fiscal Regulation and Banking Management Act, 2003 (c) Fiscal Responsibility and Budget Management Act, 2003 (d) Financial Responsibility and Budget Management Act, 2003 63. Market borrowing program of the central and state government is managed by: (a) RBI (b) Central Government (c) Both (a) and (b) (d) None of the above 64. Deficit Financing means: (a) Public expenditure in excess of public revenue (b) Public revenue in excess of public expenditure (c) Both (a) & (b) (d) None CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 16
65. Ministry of Corporate Affairs enforced the LLP Act, with effect from: Page 17 (a) 31st March, 2008 (b) 1st April, 2008 (c) 31st March, 2009 (d) 1st April, 2009 66. DPIN Stands For (a) Designated Partner Identification Number (b) Director Personal Identification Number (c) Director and Partner Identification Number (d) Direct Partner Identification Number 67. LLP shall be Taxed Under Income Tax Act,1961 As of (a) Partnership Firm (b) Company (c) Association of person (d) HUF 68. Minimum Number of Partner in LLP (a) 1 (b) 2 (c) 3 (d) 4 69. Who cannot become partner in LLP (a) Person has been found to be unsound mind. (b) Person is an undischarged insolvent. (c) Person has applied to be adjudicated as an insolvent. (d) All of above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook
70. A Person shall cease to be a partner of LLP (a) On receiving advance from LLP (b) On giving advance to LLP (c) On his death (d) After completing age of 60 years 71. Partner of LLP is personally liable in case of (a) Liabilities of LLP (b) Personal liability of other partner (c) His own personal liability (d) Wrongful act or omission of any other partner 72. Document which is defining the role and obligations of Partner in LLP (a) Partnership Deed (b) LLP agreement (c) Memorandum of association (d) Article of association 73. LLP may be wound up by Tribunal (a) If LLP is unable to pay its debt (b) If LLP has acted against interest of sovereignty & integrity of India (c) If LLP has made a default in filling of annual return with Registrar for any five consecutive Financial years (d) All of above 74. Incorporation documents shall be filled by LLP with (a) Tribunal (b) SEBI (c) Central Government (d) Registrar CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 18
75. According to LLP Act 2008, Body Corporate include (a) A company incorporated outside India (b) A corporation sole (c) Co-operative society (d) Partnership Firm 76. Every partner of a LLP, for the purpose of business of the LLP, is the agent of the ___________ , but is not the agent of the ____________ (a) LLP, partners (b) Partners, LLP (c) Both (a) and (b) (d) None of the above 77. Every LLP must prepare and file a statement of Account & Solvency with the Registrar within ________ from the end of the Financial Year. (a) 1 month (b) 12 months (c) 3 months (d) 6 months 78. Every LLP shall also file an Annual Return duly authenticated, with the _________ within ________ of closure of its Financial Year. (a) Registrar, 60 days (b) Registrar, 120 days (c) Registrar, 180 days (d) Registrar, a year 79. The Indian Partnership Act came into force in: (a) 1872 (b) 1919 (c) 1930 (d) 1932 CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 19
80. A partnership firm comes into existence by agreement between all the partners, and such agreement should be: (a) Express agreement only (b) Implied agreement only (c) Either express or implied (d) Registered 81. Which of the following is an essential feature of a Partnership? (a) Result of an Agreement (b) Sharing of Profits (c) Mutual agency between Partners (d) All of these 82. Where in an existing partnership firm, the number of partners is reduced to one , the firm is compulsorily dissolved (a) True, as there must be at least two persons in a partnership firm. (b) False, as once a partnership firm is formed. It continues to exist till it dissolved by a court order. 83. A partnership is known as partnership at will where i. Its duration is not fixed ii. Its duration is fixed iii. It can be dissolved at any time iv. Mode of dissolution is specified (a) (i), (ii) (b) (ii), (iii) (c) (iii), (iv) (d) (i), (iii) CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 20
84. A and B agreed to produce a film and share the profits of hiring it out. In this case, there is: (a) Partnership (b) Co-Ownership (c) Joint-Ownership (d) None of these 85. A written agreement by which a Partnership firm is created is known as: (a) Partnership Deed (b) Deep Document (c) Licence Agreement (d) None of these 86. The partners are entitled to share equally the profits of the firm after deduction of any interest on capital subscribed. (a) True (b) False (c) Can’t say 87. Every partner is liable, jointly with all the other partners and also severally, for all the acts of the firm done while he / she is a partner: (a) True (b) False (c) Can’t say 88. A partner is the agent of the firm for the business of the firm. (a) True, as the mutual agency relationship is the foundation of the law of partnership (b) False, as in that case a firm is reduced to the status of a mere agency. 89. Which of the following statement is incorrect? (a) A person who receives the profits is always a partner (b) A person who receives the profits is not necessarily a partner (c) The true test of partnership is the mutual agency i.e., agency relationship among partners CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 21
(b) The partnership comes into existence only by an agreement 90. It is the duty of every partner not to carry on any business: (a) Similar to that of the firm (b) Competing with that of the firm (c) Both (a) and (b) (d) None of these 91. In addition to the duty to be just and faithful to each other, which other duties of partners are provided in Section 9 of the Indian Partnership Act 1932? (a) Duty to carry on firm business to the greatest common advantage (b) Duty to render the true accounts (c) Duty to give full information of all things affecting the firm (d) All of the above 92. Rights to __________ cannot be claimed by a partner as a matter of right. (a) Receive remuneration (b) Share profits (c) Take part in business (d) Have access to account books 93. On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed (a) True (b) False 94. What act generally includes completing unfinished partnership business, collecting and paying debts, collecting partnership assets to be turned into cash, and taking inventory? (a) Formation (b) Dissolution (c) Winding up (d) Termination CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 22
95. An agreement becomes a contract when: (a) These is some consideration for it (b) Parties are competent to contract (c) Their consent is free and their object is lawful (d) All of the above 96. When one person signifies to another his willingness to do or to abstain from doing any thing with a view to obtaining the assent of that other person to such act or abstinence he is said to make a (a) Proposal (b) Promise (c) Both (a) and (b) (d) None of these 97. When the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted then it is called: (a) Proposal (b) Promise (c) Agreement (d) None of these 98. The person making the proposal is called: (a) Promiser (b) Promisee (c) Both of above (d) None of above 99. The person to whom proposal is made is called: (a) Promisor (b) Promisee (c) Both of above (d) None of above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 23
100. Every promise and every set of promises forming the consideration for each other: (a) A proposal (b) An offer (c) An agreement (d) None of above 101. \"Reciprocal\" Contracts means: (a) One sided contracts (b) Bilateral contracts (c) Trilateral contracts (d) None of above 102. Promise which forms the consideration or part of the consideration for each other is called (a) Simple promise (b) Conditional promise (c) Reciprocal promise (d) None of above 103. An agreement not enforceable by law is called (a) Void agreement (b) Valid agreement (c) Voidable agreement (d) None of above 104. An agreement enforceable by law is called (a) An agreement (b) Contract (c) Both (a) and (b) (d) None of above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 24
105. An agreement which is enforceable by law at the option of one or more of the parties there to but not at the option of other or others is (a) A void contract (b) A voidable contract (c) A valid contract (d) All of above 106. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable is called (a) Valid contract (b) Voidable contract (c) Void contract (d) None of above 107. A proposal may be revoked at any time (a) Before the communication of its acceptance (b) Before the rejection of its communication (c) Both (a) and (b) (d) None of above 108. A contract made by lunatic is____ in the eye of Law (a) Void (b) Valid (c) Absolute (d) None of above 109. \"Indemnity\" means (a) Security from damage or loss (b) Security for more profit (c) An act for protection (d) Both (a) and (b) CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 25
110. The term \"Bailment\" means (a) Delivery of a thing entrusted for some special purpose or object upon a contract (b) Delivery of goods free of cost (c) Delivery of goods without cost for welfare of public (d) None of above 111. The person who during the contract of bailment deliver goods is called (a) Bailor (b) Bailee (c) Both (a) and (b) (d) None of above 112. The person to whom goods are delivered according Bailment is called (a) Bailor (b) Bailee (c) Both (a) and (b) (d) None 113. The bailment of goods as security for payment of debt or performance of a promise is called (a) Pledge (b) Special bailment (c) Both (a) and (b) (d) None of above 114. In India, commodity contracts are regulated by: (a) NSE (b) SEBI (c) Forward Contracts (Regulation) Act, 1952 (d) MCXE CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 26
115. In India Negotiable Instruments Act came into force in the year ____. (a) 1861 (b) 1881 (c) 1871 (d) 1981 116. The undertaking contained in a promissory note, to pay a certain sum of money is: (a) Conditional (b) Unconditional (c) May be conditional or unconditional depending upon the circumstances (d) None of the above 117. Which of these is not a negotiable instrument as per Negotiable Instrument Act, 1881? (a) Bill of Exchange (b) Delivery note (c) Bearer cheque (d) Share certificate 118. Who are the parties in a bill of exchange? (a) Payee (b) Drawee (c) Drawer (d) All of the above 119. Negotiable Instrument means a promissory note, bill of exchange or cheque payable to: (a) Bearer (b) Order (c) Either to bearer or order (d) Neither to bearer or order CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 27
120. In a promissory note, the amount of money payable (a) Must be certain (b) May be certain or uncertain (c) Is usually uncertain (d) none of the above 121. The notice of dishonour of cheque is to be given with in ______ of its knowledge to receiver. (a) 10 days (b) 30 days (c) (a) & (b) (d) 15 days 122. The dishonour of Cheque is punishable for a maximum term up to_____ years. (a) 1 year (b) 5 years (c) 2 years (d) 4 years 123. Cognizance of an offence under section 138 can be taken by a court only on a/an (a) Police report (b) Complaint (c) Application to the District Judge (d) None of the above 124. What is the motive of enactment of the Insolvency and Bankruptcy Code, 2016? (a) To consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals (b) To maximize the value of assets of interested persons (c) To increase availability of credit (d) All of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 28
125. Applicability of the provisions of the Code shall be applied to: (a) Company incorporated under the Companies Act, 2013 (b) Limited Liability Partnership under Limited Liability Partnership Act, 2008 (c) Personal Guarantors (d) All of above 126. Who are considered corporate persons under the provisions of the IB Code? (a) Companies and Limited Liability Partnerships (b) Companies and Unlimited Liability Partnership firms (c) Financial service provider (d) Companies, Limited Liability Partnerships and Trusts 127. Who is the Corporate Debtor as per the Code? (a) Company who owes a debt to any person (b) Corporate person who owes a debt to any person (c) Company who borrows from any company (d) Corporate person who owes a debt to any company 128. Who are the persons who may initiate Corporate Insolvency Resolution Process (CIRP): (a) Only Corporate Debtor (b) Financial Creditor and Operational Creditor (c) Financial Creditor, Operational Creditor and Corporate Debtor (d) Corporate Debtor and Financial Creditor 129. Who among the following is the Adjudicating Authority under the Code: (a) Registrar of Companies (b) Regional Director of Companies (c) National Company Law Tribunal (d) Debt Recovery Tribunal CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 29
130. Date of commencement of The Corporate Insolvency Resolution Process shall be: (a) Date of filing application before Adjudicating Authority (b) Due date for payment which has not been met by the debt (c) Date of admission of the application by the Adjudicating authority (d) Date of communication of order by Adjudicating authority 131. Once the application is received, the adjudicating authority shall confirm the existence of default within: (a) 7 days (b) 14 days (c) 21 days (d) None of the above 132. The interim resolution professional under the Corporate Insolvency resolution process vested with the management of the corporate debtor shall have the authority to access the books of accounts, records and other relevant documents of corporate debtor available with: (a) Depositories of securities (b) Adjudicating authority (c) Information utility, depositories of securities (d) Board of directors, information utility, depositories of securities 133. Meetings of the Committee of creditors shall be conducted by (a) The CEO of the Corporate debtor (b) The Resolution professional (c) The representative of the largest financial creditor (d) The CFO of the corporate debtor 134. The Resolution professional shall continue as the liquidator unless replaced by (a) DRT (b) NCLT (c) Official Liquidator of the MCA (d) Insolvency Board CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 30
135. According to the Code, for the purpose of liquidation, what shall not be included as Liquidation Estate: (a) Assets that may or may not be in possession of the corporate debtor including but not limited to encumbered assets. (b) Assets held in trust for any third party (c) Assets subject to the determination of ownership by the court or authority (d) Tangible assets, whether movable or immovable 136. During Liquidation process, a liquidator can access the information for the purpose ofadmission and identification of liquidation estate assets relating to corporate debtor from which source: (a) Database maintained by the Board (b) Information utility (c) Registration authority (d) All of the above 137. Claims of creditors during the commencement of the liquidation process can be received or collected within: (a) 45 days (b) 30 days (c) 15 days (d) 21 days 138. Public notice under bankruptcy shall be given for inviting claims from creditors by: (a) IBBI (b) Bankrupt (c) NCLT (d) Bankruptcy trustee 139. The Insolvency and Bankruptcy Board of India is appointed by: (a) RBI (b) Central Government (c) National Company Law Tribunal (d) Supreme Court CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 31
140. Any person aggrieved by the functioning of an Insolvency Professional, Insolvency professional agency or Information utility may apply to: (a) The IBBI (b) NCLT (c) NCLAT (d) Supreme Court 141. The Insolvency and Bankruptcy Board governs the functioning of: (a) Insolvency professionals (b) Insolvency professionals, Insolvency Professional Agencies and Information utilities (c) Information utilities (d) Insolvency professionals, Agencies and Information utilities and NCLT 142. When did the Prevention of Money Laundering Act come into force? (a) 1 April 2009 (b) 1 July 2005 (c) 1 August 2005 (d) 1 August 2009 143. Which of the following acts can be considered as acts of Money Laundering in the act? (a) Illegal arms sales (b) Drug trafficking (c) Insider trading (d) All of the above 144. Mr. Y was found guilty under Narcotic drugs and Psychotropic Substances Act, 1985. What are the possible actions which can be taken against Mr. Y for money laundering of the sum there from? (a) 3 to 10 years Imprisonment and Rs. 1,00,000 Fine (b) 3 to 7 years Imprisonment (c) 3 to 10 years Imprisonment and Fine (d) upto 3 years imprisonment CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 32
145. Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and ________________ shall be guilty of offence of money-laundering. (Section 3 of PMLA) (a) Intentionally Participates (b) Unknowingly participates (c) Projecting it as untainted property 146. What is a `scheduled offence’? (a) Circulation of Fake Indian Currency Notes (b) Offences relating to Narcotic Drugs (c) Waging war against the Nation (d) All of the Above 147. Section 12 of the Prevention of Money Laundering Act, 2002 lays down following obligations on banking companies, financial institutions and intermediaries (a) Maintain a record of all transactions (b) Verify and maintain the records of the identity of all its clients (c) Furnish information of transactions referred to in clause (a) to the Director (d) All of the above 148. Mr. Santosh is aggrieved by an order made by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002. He wants to file an Appeal. Which is the Appellate Authority against the order passed by Adjudicating Authority? (a) Appellate Tribunal (b) High Court (c) Supreme Court (d) None of the above 149. Expansion of FIU-IND is: (a) Financial International Unit – India (b) Financial Intelligent Unit – India (c) Financial India Unit – India (d) Financial Intelligence Unit – India CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 33
150. “Current account transaction” means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes: (a) payments due in connection with foreign trade, other current business, services and short term banking and credit facilities in the ordinary course of business (b) payments due as interest on loans and as net income from investments (c) remittances for living expenses of parents ,spouse and children residing abroad (d) expenses in relation to foreign travel, education and medical care of parents, spouse and children (e) All of the above 151. Who is a “Person Resident outside India” as per the FEMA Act, 1999? (a) Who has taken birth out of India (b) Who is gone out of India for 181 days (c) Who is not resident of India (d) None of the above 152. The following transactions are regarded as Capital Account Transaction (a) Any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India (b) Export, import or holding of currency or currency notes (c) Deposits between persons resident in India and persons resident outside India (d) All of the above 153. Following transactions are prohibited under FEMA, 1999 unless permission of RBI is obtained: (a) to deal in or transfer of foreign exchange or foreign security to any person other than authorised person (b) make any payment to any person resident outside India otherwise than authorized person (c) receive any payment from any person resident outside India otherwise than authorised person (d) All of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 34
154. Every Private Company must have at least ________ Directors (a) 1 (b) 2 (c) 3 (d) 7 155. The maximum number of members in Private Company not to exceed___ (a) 10 (b) 50 (c) 100 (d) 200 156. OPC is a company with: (a) One Member (b) One Director (c) One Officer (d) One Business 157. If OPC has 2 Directors, then at least _______ Board meetings in a year must be convened (a) 2 (b) 3 (c) 4 (d) 6 158. The minimum number of members and directors under public company are_________ and __________ (a) 7, 3 (b) 3, 7 (c) 7, 2 (d) 3, 5 CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 35
159. __________ is the supreme charter of the company & defines the powers of the company. (a) Memorandum of Association (b) Articles of Association (c) Certificate of Incorporation (d) Prospectus 160. What is the minimum number of directors required in Private Company? (a) 1 (b) 3 (c) 2 (d) 4 161. What is the minimum number of directors required in Public Company? (a) 2 (b) 7 (c) 3 (d) 15 162. What is the maximum number of directors mentioned under Act for a Private Company? (a) 10 (b) 7 (c) 15 (d) No restriction 163. What is the maximum number of directors mentioned under Act for a Public Company? (a) 50 (b) 7 (c) 15 (d) No restriction CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 36
164. Which Company do not have capital clause? (a) Limited by shares (b) Limited by Guarantee (c) Both a and b (d) None of the above 165. The Limited company have subtypes namely ------------ (a) Company limited by shares (b) Company limited by Guarantee (c) Company limited by shares as well as Guarantee (d) All of above 166. Meeting of board of directors is called as ------------- (a) General meeting (b) Creditor meeting (c) Board meeting (d) None of the above 167. Clauses of Memorandum of Association (a) Name Clause (b) Object Clause (c) Registered office Clause (d) All of the above 168. ............. Is legal & constitutional document of the company which states the matters like Name, Place of business, Object, Capital, Liability, Subscription of the company (a) Article of Association (b) Memorandum of Association (c) Certificate of incorporation (d) None of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 37
169. Memorandum of Association and Article of Association are public documents? (a) True (b) False (c) Partly True (d) Partly False 170. The First AGM shall be held within........months from the end of financial year. (a) 6 (b) 9 (c) 12 (d) 15 171. Except for first AGM, AGM shall be held within.......months from the end of financial year. (a) 3 (b) 6 (c) 9 (d) 12 172. The Banking Ombudsman Scheme was introduced under which of the following acts? (a) Banking Regulation Act, 1935 (b) Banking Regulation Act, 1949 (c) Banking Regulation Act, 1985 (d) None of the above 173. Which are the banks covered under the Banking Ombudsman Scheme, 2006? (a) Scheduled Commercial Banks (b) Regional Rural Banks (c) Urban Co-operative banks (d) All of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 38
174. Banking Ombudsman is appointed by __________: (a) Central Finance Minister (b) Reserve Bank of India (c) SEBI (d) None of The Above 175. Banking Ombudsman is appointed for: (a) handling and redress banks complaints against customers' behavior (b) handling and redress customer complaints against deficiency in certain banking services (c) providing decision on important banking operations like - CRR, SLR and MSF etc. (d) None of The Above 176. Which among the following is suitable ground of complaint against banks to Banking Ombudsman: (a) Charging any commission for acceptance of small denomination notes (b) Any delay in payment of inward remittances or non-payment of inward remittances (c) Any excessive delay or non - payment of collection of cheques, drafts, bills etc. (d) If any banking organization refuses to accept taxes or any delaying in accepting taxes ( as required by RBI or Government of India). (e) Any Delay in issuing Government Securities (f) All of The Above (g) None of The Above 177. A bank customer can file a complaint against banking organization if reply is not received from the bank within a period of _____after concerned bank has received complaint representation: (a) Two Months (b) One Month (c) Three Months (d) None of The Above 178. You can file a complaint to Banking Ombudsman if: Page 39 (a) If bank rejects the complaint (b) If bank show negligence for your complaint (c) Both (a) and (b) CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook
(d) None of The Above 179. The Banking Ombudsman may reject a complaint at any stage if it appears to him that a complaint made to him is: (a) compensation sought from the Banking Ombudsman is beyond ₹ 20 lakh (₹ Two Million). (b) the complaint is without any sufficient cause (c) in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant. (d) All of the above 180. Which of the following Insurance Ombudsman Rules is presently in effect? (a) Insurance Ombudsman Rules 2016 (b) Insurance Ombudsman Rules 2015 (c) Insurance Ombudsman Rules 2017 (d) Insurance Ombudsman Rules 2018 181. What is the maximum amount of award that Insurance Ombudsman can pass? (a) Rs 10 lakhs (b) Rs 20 lakhs (c) Rs 30 lakhs (d) Rs 40 lakhs 182. The Insurance Ombudsman shall finalise its findings and pass an award within a period of _____ months of the receipt of all requirements from the complainant. (a) one (b) two (c) three (d) four CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 40
183. Why do we need to have set rules and regulations for consumer rights? (a) To protect and promote the interest of the consumers against unethical and unfair trade practices (b) To bring discipline in the country (c) To provide police protection to consumers during a dispute with the sellers (d) Its aim is to make all the sellers fair and honest 184. When was the Consumer Protection Act passed in India? (a) 1968 (b) 1986 (c) 1984 (d) 1976 185. What was the cause of the rise of consumer movement? (a) The movement started to help consumers to form a group to protest against price rise (b) The movement grew out of consumers dissatisfaction due to unfair practices of sellers (c) The movement grew out of the satisfaction enjoyed by the consumers for fair practices of the sellers (d) The movement was started to help the sellers to promote their own interest and cheat consumers 186. The quasi-judicial machinery set up at the highest level for redressal of consumer disputes is: (a) The District Forum (b) The State Consumer Commission (c) Consumers International (d) National Consumer Disputes Redressal Commission 187. Which of the following is not a function of Consumer Protection Councils? (a) To create awareness of consumer rights among consumers (b) To guide consumers on how to file cases in consumer courts (c) To provide compensation to consumers when they are cheated by shopkeepers (d) To represent consumers in Consumer Courts at times CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 41
188. ____________________states that a consumer should know the reliefs available to him in case of product or service falls short of his expectations. (a) Right to Safety (b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer Education 189. The Consumer Protection Act provides relief to customers such as replacement of product, removal of defect in the product, compensation for any loss or injury suffered by the consumer. Which consumer right has been highlighted in this statement? (a) Right to Safety (b) Right to Seek Redressal (c) Right to be informed (d) Right to Consumer Education 190. _______________states that, the consumer has a right to pick a product from a variety of products at competitive prices. (a) Right to Safety (b) Right to choose (c) Right to be informed (d) Right to Consumer Education 191. The redressal mechanism available to consumers under the Consumer Protection Act, 1986 is: (a) District Forum (b) State Commission (c) National Commission (d) All of the above 192. The District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed: (a) One crore (b) Two crores (c) Five crores (d) Ten crores CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 42
193. The district commission allows that every complaint shall be disposed of within a period of __________ months where the complaint does not require analysis or testing of commodities. (a) 3 (b) 6 (c) 9 (d) 12 194. The district commission allows that every complaint shall be disposed of within a period of __________ months where the complaint requires analysis or testing of commodities. (a) 3 (b) 5 (c) 9 (d) 12 195. The State Government shall, by notification, establish a State Consumer Disputes Redressal Commission, to be known as the __________________. (a) District Commission (b) State commission (c) National Commission (d) None of the above 196. The State Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration, exceeds Rs. ________, but does not exceed Rs. __________: (a) 1 crore, 10 crores (b) 1 crore, 20 crores (c) 10 crores, 50 crores (d) 10 crores, 10 crores 197. Any person aggrieved by an order made by the District Commission may prefer an appeal against such order to the State Commission on the grounds of facts or law within a period of ________ days from the date of the order. (a) 30 (b) 45 CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 43
(c) 60 (d) 120 198. Any person aggrieved by an order made by the State Commission may prefer an appeal against such order to the National Commission within a period of ________ days from the date of the order. (a) 30 (b) 45 (c) 60 (d) 120 199. \"Right to information\" means the right to information accessible under this Act which is held by or under the control of any public authority and includes the right to: (a) inspection of work, documents, records (b) taking notes, extracts or certified copies of documents or records (c) taking certified samples of material (d) obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device (e) All of the above 200. \"Record\" under RTI Act includes: (a) any document, manuscript and file (b) any microfilm, microfiche and facsimile copy of a document (c) any reproduction of image or images embodied in such microfilm (d) any other material produced by a computer or any other device (e) All of the above 201. …………….. decide the final price at which the securities shall be issued, under the book building issue (a) Book runners (b) Issuer (c) Both (a) and (b) (d) None of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 44
202. ………………… is a mechanism where, during the period for which the book for the offer is open, the bids are collected from investors at various prices, which are within the price band specified by the issuer. (a) Book building Issue (b) Fixed price issue (c) Both (a) and (b) (d) None of the above 203. A ……………… is an issue of shares or of convertible securities by a company to a select group of persons (a) Bonus issue (b) Private placement (c) Rights Issue (d) None of the above 204. …………………. is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities to the public. (a) Rights issue (b) Further public issue (c) Initial Public Issue (d) None of the above 205. SEBI provides for measures for: (a) promoting fraudulent and unfair trade practices relating to securities markets (b) promoting investors' education and training of intermediaries' of securities markets (c) promoting insider trading in securities (d) all of the above 206. Intermediaries includes: Page 45 (a) Merchant Bankers (b) Underwriters (c) Stock Brokers and Sub Brokers (d) All of above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook
207. Intermediaries does not include: (a) Mutual fund (b) Venture capital fund (c) Foreign institutional investor and foreign venture capital investor (d) All of above 208. Given below are 5 entities. Which of them do not come under the ambit of market intermediary as the SEBI Intermediary Regulations 2008? i. Banker to an issue ii. Venture Capital Fund iii. Mutual Fund iv. Collective Investment Schemes v. Credit Rating Agencies (a) Only (v) (b) Only (ii) and (iv) (c) Only (ii), (iii) and (iv) (d) Only (i) and (v) (e) All come under intermediaries 209. As per SEBI Intermediary Regulations 2008, to who does a stock broker submits his application seeking for grant of certificate of registration? (a) Clearing Corporation (b) Depository (c) Stock Exchange (d) SEBI (e) Central Government 210. The proportion of a public issue of shares allocated to various categories of investors is decided by (a) SEBI (b) Issuer (c) Stock exchange (d) Registrar and Transfer agent CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 46
211. World Bank was comes into existence on: Page 47 (a) July, 1946 (b) July, 1945 (c) July, 1944 (d) None of The Above 212. Headquarter of World Bank is situated at: (a) Washington D.C. (b) Geneva (c) Luanda (d) None of The Above 213. Basic Purpose of World Bank is: (a) Removal of Poverty from world (b) Provide Credit to Poor Countries and Developing Countries (c) Both (a) and (b) (d) None of The Above 214. Member countries of 'World Bank' are: (a) 187 (b) 188 (c) 189 (d) None of The Above 215. UNODC stands for: (a) United Nations Office on Drugs and Crime (b) United Narcotics Office on Drugs and Crime (c) United Nations Organization on Drugs and Crime (d) None of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook
216. UNODC was established in _____________ and headquartered in _____________ (a) 1997, Washington D.C. (b) 1997, Vienna (c) 1998, Washington D.C. (d) 1998, Vienna 217. Which of the following activities are performed by UNODC: (a) Countering Terrorism (b) Tacking corruption and its catastrophic impact of societies (c) Strengthening Member States capacities to confront threats from Transnational Organized Crime (d) All of the above 218. UNTOC stands for: (a) United Nations Convention Against Transnational Organized Crime (b) United Nations Convention Against Transnational Organizational Crime (c) United Nations Council Against Transnational Organized Crime (d) None of the above 219. UNTOC was adopted in _______________ (a) 1999 (b) 2000 (c) 2001 (d) 2002 220. UNTOC is also known as: (a) Vienna Convention (b) Palermo Convention (c) None of the above CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 48
221. Palermo Convention and its protocols are: (a) Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children (b) Protocol against the Smuggling of Migrants by Land, Sea and Air (c) Protocol against the Illicit Manufacturing of and Trafficking in Firearms, their Parts and Components and Ammunition (d) Only (a) and (c) (e) All of the above 222. What is a 'treaty' according to the Vienna Convention on the Law of Treaties (VCLT)? (a) Treaties are all agreements concluded between States, international organizations and non-State entities (e.g. corporations) (b) Treaties are agreements concluded between States in written form and governed by international law (c) Treaties are both the written and oral agreements between States (d) Treaties are agreements concluded between States in written form governed either by international or domestic law 223. How treaties are to be interpreted? (a) Treaties are to be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose (b) Treaties are to be interpreted only in accordance with the ordinary meaning of their terms (c) Treaties are to be interpreted in accordance with the intention of the parties, as evidenced in the preparatory works of the treaty (d) Treaties are to be interpreted only in light of its object and purpose 224. Who has the authority to conclude a treaty on the part of States? (a) Treaties are concluded by the competent representatives of States. Heads of States, heads of governments, ministers of foreign affairs and heads of diplomatic missions are presumed to have such authority (b) Treaties may only negotiated and concluded by the heads of State and ministers of foreign affairs CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 49
(c) Treaties are negotiated and signed only by the persons that bear the necessary 'full powers' and no person is presumed to hold such authority (d) Treaties are concluded only by members of the diplomatic missions of States 225. Financial Action Task Force (FATF), an inter-governmental body, was established in _________ during the G7 Summit in Paris (France) to combat the growing problem of money laundering and terrorist financing. (a) 1997 (b) 1988 (c) 1989 (d) 1990 226. FATF aims to establish international standards for combating: (a) Money laundering (b) Terrorist financing (c) Other threats related to international financial system (d) All of the above 227. OAS stand for the (a) Organization of African States (b) Office of American Statutes (c) Office of American Subsidiaries (d) Organization of American States 228. The OAS was founded in: (a) 1915 (b) 1948 (c) 1929 (d) 1976 CFP Level 1 - Module 3 - Regulatory Environment, Law & Compliance - Workbook Page 50
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